DSGR · Distribution Solutions Group, Inc.

Distribution Solutions Group reported first quarter 2026 results with revenue of $496.0 million, up 3.8% year-over-year, driven by organic sales growth of 3.6% and a partial quarter contribution of $0.8 million from the acquisition of Eastern Valve & Control Specialties Ltd. Sequentially, organic sales grew 2.8% and organic average daily sales increased 3.7% over Q4 2025. However, profitability faced headwinds: gross margin contracted 140 bps to 32.9% due to customer and vertical mix shifts and higher tariff rates, partially offset by pricing benefits. GAAP operating income fell 32.2% to $13.6 million, including $11.0 million of non-cash intangible amortization and $4.5 million of non-recurring severance, acquisition-related retention, stock-based compensation, and other items. Excluding these, adjusted operating income was $29.1 million, down 15.3% from $34.4 million a year ago. Adjusted EBITDA margin was 7.6%, down 140 bps year-over-year but up 20 bps sequentially. The company noted that timing and isolated expenses, along with fewer selling days, negatively impacted adjusted EBITDA margin by approximately 70 bps; excluding these, adjusted EBITDA margin would have been 8.3%. Net income was $0.4 million, or $0.01 per diluted share, compared to $3.3 million, or $0.07 per share, in the prior year. Non-GAAP adjusted diluted EPS was $0.24, down from $0.31. Cash used in operations was $20.4 million, with capital expenditures of $5.6 million. The company ended the quarter with total liquidity of $415.2 million, including $65.0 million in cash and $350.2 million available under its credit facility, and net debt leverage of 3.8x. Management highlighted improved sequential profitability and positive momentum exiting Q4, while acknowledging margin pressures that were anticipated earlier in the year.